Worldwide sales to end users totaled 1.75 billion units in 2012, a 1.7% decline from 2011 sales, Gartner said, adding that fourth-quarter 2012 smartphone sales reached 207.7 million units, 38.3% higher than the same period last year.

Gartner expects sales of worldwide smartphone sales to end users to be close to 1 billion units in 2013, while it estimates overall mobile phone sales to end users to reach 1.9 billion units.

IPhone-maker Apple Inc
AAPL, -1.36%
and South Korea's Samsung Electronics Co. (005930.SE) dominated the smartphone segment with a combined market share of 52% in the fourth quarter, up from 46.4% in the third quarter of 2012, Gartner said.

"The success of Apple and Samsung is based on the strength of their brands as much as their actual products. Their direct competitors, including those with comparable products, struggle to achieve the same brand appreciation among consumers, who, in a tough economic environment, go for cheaper products over brand," Anshul Gupta, analyst at Gartner, said.

Former market leader, Finland's Nokia's
NOK, +0.35%
handset sales in the fourth quarter were boosted by a good response to its Asha mobile phones and the launch of the latest Lumia Windows Phone 8 models. But it wasn't sufficient to stop Nokia from losing market share, which was the lowest it has ever been, Gartner said.

In 2012, Nokia reached 39.3 million smartphone sales worldwide, down 53.6% from 2011.

Gartner cited analysts as saying that aside from continued focus on Lumia, "Nokia needs to build on momentum around Asha in 2013 by adding devices and apps to further enhance its overall value proposition and, in doing so, moving up the price point slightly to achieve better margins breaching the gap left by Symbian."

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